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THE STATE BANK

THE STATE BANK

CIRCULAR No. 04/1997/TT-NHNN1 OF OCTOBER 23, 1997 GUIDING THE CERTIFICATION AND BLOCKING OF REGISTERED BILLS AND BONDS ISSUED THROUGH THE STATE BANK IN CREDIT RELATIONS

1. OBJECTS OF APPLICATION

1. Bills and bonds referred to in this Circular include the State Bank's bills, the State Treasury's bills and State Treasury's bonds (hereunder collectively referred to as bills and bonds) issued through the State Bank by the mode of registration. Registered bills and bonds used as pledged property in credit relations must be under the pledgor's ownership, have not been due and be accepted by the pledgee.

2. Subject to this Circular are units that own registered bills and bonds and open accounts therefor at the State Bank (the State Bank's transaction offices or branches where the units open their accounts) These units may use registered bills and bonds as pledged property in credit relations.

3. In this Circular the unit that seeks a loan or guaranty is referred to as the pledgor; and the lending unit is referrred to as the pledgee.

4. The pledge and the pledge contract between the involved parties shall comply with the legislation on pledge, this Circular shall only guide the certification and blocking of registered bills and bonds used as pledged property in credit relations.

II. PROCEDURE AND MODE OF CERTIFICATION AND BLOCKING OF REGISTERED BILLS AND/OR BONDS

1. The units that need to pledge their registered bills and/or bonds for loans or guaranteeing loans shall send to the State Bank (the State Bank's transaction offices or branches where they open their accounts) the following documents:

- The written request for certification and blocking of registered bills and/or bonds

- The written agreement between the pledgor and the pledgee on the pledged property attached with a list of registered bills and/or bonds.

- The credit contract for the loan or the guaranty contract under which bills and/or bonds are pledged.

- The notice on the bid winning of the treasure bills and/or bonds. This notice is not required for the State Bank's bills.

The written agreement between the pledgor and the pledgee must clearly state the following:

+ The agreement between the pledgor and the pledgee on such pledge conditions as: the list of bills and/or bonds, the value and the remaining effective time of the registered bills and/or bonds used as pledged property.

+ The mode of dealing with bills and/or bonds used as pledged property in case the repayment commitment made in the credit contract already signed between the two parties is not fulfilled.

+ A request to the State Bank to monitor the accounts of the registered bills and/or bonds already used as pledged property and perform the work related to the loan for which the bills and/or bonds are pledged at the request of the pledgor and with the agreement of the pledgee.

2. After receiving the written request for certification and blocking of the registered bills and/or bonds and the documents mentioned in Point 1 above, the State Bank's Transaction Office or branch where the unit opens its account shall have to:

- Verify the legality of the dossier on the pledge of registered bills and/or bonds sent by the pledgor according to the provision in Point 1 of this part.

- Check and compare the list of registered bills and/or bonds attached to the dossier sent by the pledgor with the actual accounting data at the State Bank (the State Bank's Transaction Office or branch where the unit opens its account).

- Certify the written request for certification and blocking of registered bills and/or bonds.

- Open a blocked account for the pledgor and effect the blocking of the value of registered bills and/or bonds at the request of the pledgor and with the agreement of the pledgee.

3. If, during the time of pledge, the blocked registered bills and/or bonds become due and both pledgor and pledgee agree to replace them with other registered bills and/or bonds, the pledgor shall send the written request for replacement of the blocked registered bills and bonds (attached with the written agreement between the pledgor and the pledgee) to the State Bank (the State Bank's transaction office or branch where the unit opens its account). The State Bank shall cease blocking the registered bills and bonds which are requested to be replaced and block the new registered bills and bonds.

4. The extension of the pledge duration shall be done by the State Bank at the request of the pledgor and with agreement of the pledgee.

5. Cancellation of pledge

- The State Bank's transaction office or branch where the unit opens its account shall cancel the pledge and cease blocking the property only after receiving from the pledgor a written request for cessation of the blocking of registered bills and/or bonds attached with the pledgee's written certification of the full payment of debts and related papers.

- When the debt is due but the pledgor fails to pay fully the debt to the pledgee, the transfer of the ownership over the registered bills and/or bonds shall be effected according to the written agreement between the pledgor and the pledgee as prescribed in Point 1 of this part.

III. IMPLEMENTATION PROVISIONS

1. The Accounting and Financial Department shall have to provide guidance on the opening of blocked accounts for registered bills and/or bonds and the method of accounting for the following specific cases:

- The pledged property is the State Treasury's bills or bonds.

- The pledged property is the State Bank's bills.

- Cases where the pledgor and the pledgee are in the same locality or different localities.

2. The State Bank's Transaction Office or branch where the unit opens its account shall have to complete the process of certifying, blocking and ceasing the blocking of accounts of registered bills and/or bonds and at the same time report to the Governor of the State Bank and notify the Credit Department the situation of the pledge of registered bills and/or bonds and the transfer of the ownership of registered bills and/or bonds (if any).

3. This Circular takes effect 15 days after the date of its signing. All supplements and amendments to the provisions of this Circular shall be decided by the Governor of the State Bank.

For the Governor of the State Bank

Deputy Governor

LE DUC THUY